Is there anything more amusing than watching partisan Republican pundits try to peddle the naive line about how electoral politics, of all things, is the driving buy/sell force on the floor of the Dow Jones stock exchange? And is there anything more amusing than watching those pundits always blame Democrats for bears, and always credit Republicans for bulls?
Well, conservative columnist Lawrence Kudlow is here with the latest comic relief. Right on cue as the Dow opens the year with a strong rally, Kudlow announces that it's all due to the economic stewardship of Republicans, and specifically the Tea Party movement. But wait, stocks have been strong for several weeks running and during a time when Republicans didn't control anything in Washington, D.C., let alone dictate the direction of the economy. If politicians are somehow getting credit, shouldn't it be Obama and the Democrats?
No way. According to Kudlow, the mere idea of Republican electoral gains has inspired investors for months [emphasis added]:
The elections were the first major step toward restoring free-market capitalism and rolling back big-government controls, planning, and spending. This is a money-politics issue. Stocks roared 20 percent during the second half of last year, as markets sniffed out the huge political change. Post-election, stocks also had a big move, finishing the year at better than two-year highs
going all the way back to pre-Lehman Brothers.
See, investors picked up on the Tea Party momentum last summer and that's why stocks were up 20 percent "during the second half of last year." It's Republicans who get the credit, according to Kudlow, signing off on a completely illogical economic argument. (Can't you just hear buy orders from last summer: 'Buy today! It's very likely we're going to have a Republican Speaker of the House five months from now!')
But here are some concrete holes in Kudlow claims that the mere possibility of Tea Party-fueled Republican electoral wins helped drive the stock market. First, between February and April last year, before Republicans were supposed to get credit for stock gains, the Dow climbed 225 points, so that was Obama's doing, right? Even more problematic for Kudlow is the fact that between May, 2009 and April, 2010, the Dow soared nearly 500 points. Again, all Obama's doing, right? Not according to Kudlow.
Then note that during both July and August last summer, stocks suffered mild swoons. Who was to blame? It must be Republicans, if you follow the Kudlow Rule. Also, note that immediately following GOP wins in the midterm elections, stocks tumbled for two weeks straight. Again, based on Kudlow's odd logic, Republicans were to blame for that sell off.
The point is that every time partisan conservatives try to pretend that electoral wins or losses are responsible for bears and bulls they just embarrass themselves in the process. So our advice to the Lawrence Kudlows of the world? Quit while you're behind.
- Lawrence Kudlow